When sanctions were imposed following Russia’s invasion of Ukraine, the fallout spread to a Rio Tinto-backed alumina refinery.
Rio, which has an 80 per cent interest in a joint venture with Rusal, effectively took full control of the refinery in April. But the lawsuit from the Rusal subsidiaries is seeking to restore the previous situation.
US Treasury sanctioned him in April, alleging he had “said that he does not separate himself from the Russian state“He has also acknowledged possessing a Russian diplomatic passport, and claims to have represented the Russian government in other countries,” the US Treasury said.“Deripaska has been investigated for money laundering, and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering.
One subsidiary of Rusal delivers about 20 per cent of the bauxite to the refinery, in return getting an equal share of the alumina output. If triggered, the Rusal subsidiary’s capacity was reallocated to Rio Tinto, rendering the subsidiary’s participation “sufficiently passive to ensure compliance with sanctions” and ensuring the refinery operates at full capacity.The Australian sanctions in March against the Russian oligarchs made it a “strict liability” to deal with a sanctioned person. Two days later, the Australian government also said aluminium-related products going to Russia were “export sanctioned goods”.
But by March 29, the refinery joint venture’s board, which includes Rio Tinto’s aluminium chief operating officer Daniel van der Westhuizen, had received a circular which gave bleak legal advice.Sanctions against Mr Deripaska would be breached if the refinery company processed bauxite for the Rusal subsidiary.It would likely breach sanctions if it processed bauxite for the subsidiary and loaded alumina on its ships “regardless of the intended destination”.
Their rationale includes that the sanctions in themselves were not imposed on the Rusal entities, as defined under the contract, according to the lawsuit filed by Piper Alderman lawyers.
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